OLDEN IS GOLDEN
Geezers are geysers for American economy
THE geezers are coming! The geezers are coming! Demographic doomsayers warn slowing birth rates and graying populations will wreak economic havoc and torpedo stocks. Yet the dire scenarios of zombie-like boomer hoards leeching off their working progeny have it backward: Aging populations are always, everywhere, signs of progress — not threats to it.
Yes — America, like most developed nations, is aging. The Organization for Economic Co-operation and Development estimates 9.8% of US residents were 65 or older in 1970. At the start of 2023, the figure was 17.3%.
In 2000, there were 20.9 folks age 65 and older for every 100 “working age” counterparts (what is called the OADR or Old Age Dependency Ratio). Now, there are 30.4, and the OECD projects the ratio will top 40 by 2050.
The trend will continue to be a major theme this century, with the Census Bureau projecting America’s agedness will peak about 2080. What to do? Invest in adult diapers?
Innovation is destiny
Every major economy ages as it prospers. Living standards increase and life spans follow. Birth rates fall alongside infant mortality. American men born in 1900 on average lived to 46 and women to 48. Now, it’s 73 for men, 79 for women. Tremendous advances in health care have given us extra fruitful and productive years—in the US, Europe, everywhere.
Mick Jagger is already 80 before the Stones play MetLife Stadium this May. AARP sponsors that tour — not a joke! But boomers aplenty will splurge big-time for tickets.
Want “good” demographics instead? Careful what you ask for. Nations with low agedness (hence low OADRs) near-consistently suffer poverty, short life spans, high infant mortality, and wretched economies, markets, ecologies and lifestyles.
Still, demographics aren’t destiny. Innovation is. History shows agedness doesn’t impede growth or stocks. In 1982, America’s OADR was 20. We’ve since thrived, not dived. GDP tripled. The S&P 500 has returned 11.8% annualized since then. Yes, periodic recessions and bear markets struck — like always, everywhere. But growth continued and stocks climbed.
Doomers envision oldsters as penny-pinching parasites. Growth killers! Wrong. In 1984, Americans 75 and older spent just half what those 25 to 34 did. By 2023, that leaped to nearly 80%. Again, innovation-derived prosperity rules. Longer life spans and increased retirement ages mean oldsters earn — and spend — more. Yes, the 75-plus crowd only spends 59% of what 45-to-54s do (America’s highest spending bracket). But that’s well above 1984’s 39%.
We geezers invest, funding capitalism’s growthy magic. We give to descendants who spend. Many of us work into our 80s. (I’m 73 — no retirement in sight.) Like legendary financier Bernard Baruch once famously said: “To me old age is always 15 years older than I am.”
Demo-doomsters
Age isn’t the detriment it was when Baruch was born in 1870. There are now fewer physically demanding and risky agricultural and factory jobs, and more service-and information-related work. Accumulated experience and technology can make oldsters increasingly productive, not less so. (Yes, I know President Biden can’t string coherent sentences together consistently and dementia hits many — all part of the stats).
Demo-doomsters also erroneously extrapolate recent trends. Who really knows if developed world birthrates keep falling? Or how immigration shifts skilled workers around? Or what efficiencies new innovations bring?
Stocks? They price factors impacting firms’ profitability three to 30-ish months out. Not further. Demographic trends evolve glacially over decades, giving markets eons to adapt.
So let the demo-doomers keep talking. They are only bricking up the wall of worry driving this bull market higher.